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Occidental (OXY) Up 19% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Occidental Petroleum (OXY - Free Report) . Shares have added about 19% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Occidental due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Occidental Q1 Loss Narrower Than Expected, Sales Top

Occidental Petroleum Corporation reported first-quarter 2021 loss of 15 cents per share, narrower than the Zacks Consensus Estimate of a loss of 33 cents. The company incurred a loss of 67 cents per share in the prior-year quarter.

Total Revenues

Occidental's total revenues were $5,479 million, which surpassed the Zacks Consensus Estimate of $4,923 million by 11.3%. The top line, however, decreased 15.1% from the year-ago quarter. The year-over-year decline was due to lower contribution from the Oil &Gas segment.

Segment Details

Oil and Gas revenues for the quarter were $3,664 million, down 27.6% year over year.

Chemical revenues for the quarter were $1,088 million, up 13.1% year over year.

Midstream & Marketing revenues for the quarter were $807 million, down 2.2% year over year.

Production & Sales

Occidental’s total production volume for the first quarter was 1,117 thousand barrels of oil equivalent per day (Mboe/d), which exceeded the upper end of the guided range of 1,085-1,115 Mboe/d. Strong production volumes were attributed to higher volumes from the Permian Resources region. Permian Resources production for the first quarter was 457 Mboe/d, which was near the higher end of the guided range of 450-460 Mboe/d.

For the quarter under review, total sales volume was 1,113 Mboe/d, down 22.3% from 1,432 Mboe/d recorded in the year-ago period. The decline was due to drop in U.S. and International sales volumes.

Realized Prices

First-quarter realized prices for crude oil improved 18.5% year over year to $55.65 per barrel on a worldwide basis. Worldwide realized natural gas liquids prices improved 79.1% from the prior-year quarter to $23.44 per barrel. Worldwide natural gas prices increased 80.1% from the year-ago quarter to $2.36 per thousand cubic feet.

Highlights of the Release

Occidental’s total expenses for the reported quarter were $5,684 million, down 28.7 year over year.

Out of its planned divestiture of $10 billion, the company has already completed $8.7 billion and utilized a major portion of the proceeds to lower outstanding debts.

Interest expenses for the reported quarter were up 12.2% to $395 million from $352 million in the year-ago period.

Financial Position

As of Mar 31, 2021, Occidental had cash and cash equivalents of $2,270 million compared with $2,008 million on Dec 31, 2020.

As of Mar 31, 2021, the company had a long-term debt (net of current portion) of $35,466 million compared with $35,745 million on Dec 31, 2020. The decrease in debt level was due to effective management of debt since the acquisition of Anadarko.

For first-quarter 2021, cash from operations was $2,135 million, up from $1,484 million in the prior-year period.

For first-quarter 2021, Occidental’s total capital expenditure was 579 million compared with $1,300 million invested in the year-ago period.

Guidance

For second-quarter 2021, it expects production in the range of 1,140-1,170 Mboe/d and output from Permian Resources in the band of 490-500 Mboe/d. The company expects exploration expenses for the second quarter to be $70 million.

For 2021, Occidental expects production to be 1,140 Mboe/d and output from Permian Resources to be 485 Mboe/d. The company expects exploration expenses for 2021 to be $215 million.

It expects to invest $2.9 billion in 2021 to further strengthen the existing operations. A total of $2.53 billion was invested in 2020. Out of the 2021 projected capital expenditure, $1.2 billion will be invested in the Permian region to bring new wells online.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -26.67% due to these changes.

VGM Scores

Currently, Occidental has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Occidental has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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